How Much Will Paychex’s Revenue Grow in the Next 2 Years?

by Trefis Team
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Paychex, Inc (NASDAQ: PAYX) has seen decent growth in sales and steady profits the past several years. During the latest quarter, net sales of the company increased by 9% y-o-y to $862.8 million, driven by growth across all major human capital management (“HCM”) product lines and professional employer organization (“PEO”) services. In particular, the company’s comprehensive human resource (“HR”) outsourcing solutions, retirement services, insurance services, and time and attendance solutions performed well. The service delivery also remained strong as the company continued to experience favorable client retention results. The benefits of tax reform and the enhanced product solutions continued to strengthen the company’s market-leading position. The acquisitions of HROI, PEO, and Lessor Group in FY2018  also contributed to the total revenue growth for the company and the management remains enthusiastic about the further growth opportunities these are likely to offer.

Going forward, we are projecting revenues for both the segments of the Company to grow as the company is working on developing their long-term strategic plan for sustainable growth. Overall, we anticipate the company’s revenue to grow at a compounded annual growth rate (CAGR) of 6.9%. We have built an explanatory dashboard for Paychex Inc’s Growth in the Next 2 Years to outline major drivers of revenue over the next two years.

Estimating Paychex Inc Revenue Growth

Total revenue for Paychex is comprised of Service revenue and Interest on funds held for clients.

These 2 segments are expected to continue to drive future revenue and profitability growth for the company, in line with the guidance provided by the company, where Service revenue will continue to be the major contributor to its top line growth.

The Company is more than ever focused on execution, ongoing improvements in top-line growth, and continuing actions to expand margins and accelerating their strengths to create more value for their consumers, customers,  colleagues, and shareholders. The company plans to grow their business through continuous improvement and sustain their profitability. All these factors, coupled with strong sales momentum, will enable Paychex Inc to continue to grow its top line.  Our detailed estimates have been highlighted in our dashboard above. You can make changes to our assumed figures to arrive at your own revenue and growth estimates for the company.


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